Americas

Venezuelan leader Nicolás Maduro fails to dispel economic concerns with cabinet shake-up

Venezuelan President Nicolás Maduro fused ministries, created new vice presidential posts and shuffled loyal staffers this week in what he called a grand “shake-up” of his 17-month-old administration. But after the dust settled, it was unclear what the rattling had accomplished as it raised doubts about the future of the beleaguered nation.

“I think the president’s use of rhetorical superlatives produced frustrated expectations,” said John Magdaleno, director of the Caracas-based Politi consulting firm. “People were hoping for real measures that might help fight their two main concerns: scarcity and inflation.”

Despite sitting on the world’s largest oil reserves, Venezuela is struggling to keep afloat. An annual inflation rate of 61 percent is ravaging the economy, and sporadic shortages of food and other necessities have soured the national mood. Maduro’s approval rating is near 35 percent by some measures. Even so, Maduro called the country’s socialist economy “a success” and said it had helped lower unemployment to 6.8 percent in June, the lowest in three decades.

The most notable element in Tuesday’s almost three-hour speech was the sidelining of Rafael Ramírez, who had become perhaps the most powerful man in the administration.

Until Tuesday, Ramírez held three titles: vice president for the economy, minister of energy and mines, and president of the state-run PDVSA oil company. On live TV, Maduro split his job three ways. Rodolfo Marco Torres, the former minister of finance and an ex-general, became vice president of the economy and finance; Asdrúbal Chávez, the cousin of late president Hugo Chávez and a longtime PDVSA executive, became minister of energy and mines; and Eulogio del Pino, PDVSA’s vice president for production, took the helm of the company, which is vital to the nation’s well being.

While Ramírez was made foreign minister and vice president of politics, most analysts saw it as a demotion.

The announcement, made late Tuesday, “was a joke, because the only person that was ‘shaken up’ was Ramírez,” said Alfredo Croes, a Caracas-based political analyst.

Croes said Ramírez’s ouster speaks to the ongoing power struggle within the ruling PSUV party. For many, Ramírez was the voice of pragmatism. In the weeks before the move he had advocated unifying the country’s chaotic three-tiered foreign exchange system, easing up on price controls and scaling back the gasoline subsidy that costs the country an estimated $12.5 billion a year.

Until recently, Maduro seemed on board with those measures, which are typically anathema to PSUV hardliners, Croes said. Now, it’s clear that the president will avoid the root cause of the malaise and continue to attack one of its most visible symptoms: smugglers who are spiriting cheap Venezuelan goods into neighboring Colombia and Brazil to sell for hefty profits.

Maduro is also advocating the use of thumbprint scanners to limit hoarding, a move seen by many as tantamount to Cuba-style rationing.

“Ramírez’s surprising demotion is important in that it reinforces our long-held view that Maduro was reluctant to implement Ramírez’s much-publicized adjustment plan,” Risa Grais-Targow, a senior analyst with the New York-based Eurasia Group, wrote to subscribers. “And that [Maduro’s] preference was to exert more control over the economy, a trend that has become more evident in recent weeks.”

While little is known about the policy preferences of Torres, the new vice president of economy, “He is a figure from the military and though not radical, seems to have been opposed to Ramírez’s plan,” Grais-Targow wrote.

Even so, breaking up Ramírez’s portfolio made sense, said José Rafael Mendoza, an independent political analyst in Caracas. He said it was too dangerous having the ministry of energy and the head of PDVSA in the same hands. He also said the new appointees were qualified for their jobs.

Even so, Mendoza said he wishes there had been more new blood pumped into the administration, which often plays musical chairs with familiar faces.

Since 2006, for example, Elías Jaua has been minister of agriculture, vice president, foreign minister and, as of Tuesday, vice president of “territorial socialist development.”

“The government is locked in a vicious circle,” Mendoza said. It “has relied on people who haven’t really been able to fulfill the jobs.”

Some believe Ramírez’s exile is profound and permanent, but Magdaleno said he may still play a key role from his post as foreign minister.

As the head of PDVSA for more than a decade, Ramírez enjoys close ties in the region thanks to Petrocaribe, the program that offered cheap fuel at favorable terms to allies, including Cuba, Nicaragua and Bolivia. His work at the petrol giant has also given him ties to the United States and Europe.

If the country decides to cut back its petrol largesse and restructure its foreign debt, Ramírez’s contacts and background may be key, Magadaleno said.

“Yes, it’s an obvious loss of influence,” he said of Ramírez’s new job. “But as foreign minister, I don’t see him as being segregated and excluded.”

Before Tuesday, expectations were high that Maduro would announce more concrete measures. However, once on television, he lashed out at the media for echoing those expectations. In particular, he focused on outlets that speculated about the fair market price of Venezuelan gasoline — currently the world’s cheapest at 5 cents a gallon.

“They’re so bold that they even fix the prices for fuel,” Maduro said. “But we won’t be blackmailed. … We will not turn this debate into a spectacle to sell newspapers.”

Croes said he believes that Maduro is feeling vulnerable, isolated and trapped between factions with differing views on the country’s future.

“There were no decisions made because his decision was precisely not to decide,” Croes said. “He’s trying to buy time.”

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